Save to afford a project in Austin, TX? - High appreciation potential
Start buying rentals in Killeen / Copperas Cove / Harker Heights, TX? - Positive Cashflow, guaranteed rent if military tenants.
Matt, I'm going to make the case for #1!
Over time, owning a good piece of property in a proven appreciating market will build more wealth than buying a cashflowing property with little hope of appreciation. Personally, I'd rather have 80% leverage on a good property in Austin that's appreciating reliably (given the facts on the ground in Austin) than a cashflower in Killeen.
I say "personally" because personal circumstances make the difference. I have a career outside of real estate that provides a healthy income. My wife also works, so we're dual-earners -- and we're both happy in our careers, too! We don't need cashflow right now, but we're excited about building wealth.
That's why we bought an expensive duplex in Los Angeles in an historical neighborhood just outside of Hollywood. If the property appreciates half as well as the longterm historical average, I'll be able to refi out my daughter's college tuition when she goes in 15 years. That's more important to me than $150/mo/door or replacing my W2 (because I own my business, so I cut my own W2, so I got no problems being a W2 employee!).
One other case to make for option #1: even if your goal is to replace your income, you might be better off letting your capital appreciate in an Austin property for a couple of years. Five or ten years from now, when you're ready to replace your income, sell the Austin assets and 1031 exchange them into a cashflowing portfolio in Killeen or anywhere else.
So, it really depends on your circumstances. What are your circumstances?
Also, I'm glad you're not somebody who equates appreciation with speculation. In Indianapolis or Cleveland, such may be the case. But in LA or Austin or Seattle, appreciation is real.